How The US Banking Sector is Getting Filthy Rich from Putin’s War in Ukraine
Hello and Welcome. In this post, I’ll show you how the United States banking sector is getting richer and richer from the war in Ukraine.
Specifically, we’ll be dwelling on how US banks take advantage of the situations of war and rake in riches.
In a little backdrop, the Russian uprising comes against a former block region under the defunct Soviet Union.
And Russia remains the biggest nation geographically after the larger collapse of the Soviet Union. Russia controls 17.1 KM2 of the 22.4 million km² formerly under the USSR.
The amazing thing is ten months into the conflict, Russia has not been able to overtake Ukraine in the war. And that brings us to the question — why has Ukraine been able to withstand the Russian Invasion this far?
The truth is that the United States and the EU have been supporting Ukraine in the resistance both financially and materially.
According to the Council on Foreign Relations, the world view the Russia-Ukraine conflict as a renewed front of the rivalry between two of the world’s most significant powers — Capitalism versus Communism.
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On one side is Russia, fronting the ideals of communism, having inherited the traditions from the former USSR. While the other pillar of idealism is Capitalism, having gained prevalence after World War 2.
So Ukraine is only a circumstantial battleground. Yet more geo-politic factors contribute to Russian aggression.
Russia itself gains the spoils of the war — the tension benefits Russia as a significant producer of Oil for the global markets. Bear in mind that Russia is a significant oil producer outside of the OPEC block.
However, our bigger question is how the United States is raking in banking riches from the Russia-Ukraine conflict.
Back in history, the contribution of the United States features in many wars not fought on US soil.
Forget about World War 2. Recent history saw the US feature in both Gulf wars. Coincidentally, both invasions of the USA into Iraq were led by the Bush presidencies — Senior and Junior.
What I want to emphasize here is that wars are not fought by nations…but by individuals or moguls who have huge stakes in governments.
So individuals with vast wealth fuel the industries that need materials for war — weapons, defense systems, and energy. Of course, all of these are interlinked by cash flows via banking finance.
Literally, the US has been pumping resources into the Russia-Ukraine war. Reportedly, the United States has funded the Ukrainian side with budgets hitting past $17 billion in security assistance by the close of October 2022.
So here are the answers to how US banks get filthy rich from the geo-political tensions between Russia and Ukraine:
First, according to Statista, the United States controls nearly 40% of the global trade in arms.
So be sure, the US is gaining a considerable market. In reference to a chart by Statista, Russia is the second global arms exporter, will not sell arms to Ukraine — their enemy — even though they control the global arms trade with a market share of close to 20%.
Of course, by default, Ukraine will not buy arms from Russia. However, they control a 7% portion of the global arms market.
As of May 2022, President Joe Biden, through US Congress, got approval to commit a budget amounting to $ 40 Billion to Ukraine. The support goes to aid; however, half of that budget goes to military spending — training personnel and equipment for war.
So you can now guess where the US banks and moguls will get rich from — the massive contracts from war budgets… Purchase of weaponry assets and systems from the United States! The sly point here is, the United States policymakers know there are huge profits from war. And those profits of war can best be sustained via funding conflicts.
To confirm, Ukraine is now experiencing record-high expenditures on war.
According to Stockholm International Peace Research Institute, the military expenditure of Ukraine is double what it was in the last 5 years.
Secondly, Russia will not, at any point, export fuel to its circumstantial enemy. Ukraine, in this case. Note carefully that Russia is a huge producer of oil and gas.
Coincidentally Russia controls roughly 10% of oil in the global market. And Europe is a vast market for the oil and gas from Russia. This key resource will set to highest prices during the crisis — so placing Russia at a vantage point by hiking prices monopolistically for its EU markets.
To remedy the geo-political deficits in energy, the US and EU allies will bring in energy from other sources — other than Russia. And thereby controlling a huge portion of cash flows from oil in the entire continental EU.
Therefore, to bankroll this agenda, the multi-national banks in the United States will take part in holding and conveying the resources involved. At the tail end, no bank transacts at zero fees.
And given that most banks involved are incorporated in the United States, they stand the opportunity to grab the profit of the war in Ukraine.
Thirdly is the Finance market. The USA and NATO or EU allies deactivated SWIFT access from Russian banks as part of the sanctions on Russia. Meaning, Russia will have little access to the global markets. Of course, the USD dominates most other transactions across the globe — and of particular focus is the conflict in Ukraine.
Aside from the global dominance of the USD in global markets, the segregation of the Russian Ruble means the dominance of the US financial intermediaries and banks.
One key area with financial markets is their reaction to geo-political tensions. Tensions favor financial market assets with a safe-haven appeal. In the Russia- Ukraine case, the currency to gain in value here remains the USD.
The values of the US Dollar have been rallying on the increasing side, following the concurrent rise in interest rates. That follows the wind-downs of economic support interventions following the COVID-19 crisis.
Overall, the banks and the non-cyclical stocks of most US firms will gain from the conditions set by the spiraling conflict between Russia and Ukraine.
Fourthly is the essentials market. Whether in conflict or peace, Ukrainians require all the basic needs to live — essential foodstuffs like wheat and corn. According to pre-conflict statistics by Aljazeera, Russia and Ukraine produce close to 20% of the global consumption of wheat.
What does this mean?
In light of the crisis, more effort goes to war, and the wheat produce will plummet. In this case, the United States will have to shift their wheat exports upwards — that is over and above the 25% global share of the market. And the hidden gain is — a more ready market from the glut created by Ukraine and Russia being in a geo-politic crisis.
Also, shifting focus from ordinary economic activities in Ukraine due to the crisis will trigger widespread demand for staples. To plug into this gap, the US has stepped in with aid. Ukrainians will only turn to US multinationals to pull in and provide for the deficits with corn and wheat.
In that way, the aid resources will find a slow path back to the source — the bank accounts belonging to the US corporates and government.
If you summarize the above four loopholes, you will find that the cost of war will benefit some nations far better than others — with the profit of war.
Agreeably, Ukrainians have a right to claim their soil. Russia is not justified to invade and raise oil prices across the entire of Europe and NATO states.
The United States is not justified in funding a war whose long-term benefits are a primary trigger for demand for weapons.
Yet, the US government requires to do business, including banking. They take the opportunities from the geo-political tensions created by war — at the end of the day, Capitalism wins!
There you go. We’ve shown you the hidden loop on how the US banks will keep getting filthy rich from the ongoing crisis in Ukraine.
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Bye!
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